tax crime investigation maturity modelthe tax crime investigation agency in a jurisdiction .however,...

Tax Crime Investigation Maturity Model

Tax Crime Investigation Maturity ModelThe Tax Crime Investigation Maturity Model aims to helpjurisdictions understand where they stand in the implementationof the OECD’s Ten Global Principles, based on a set of empiricallyobserved indicators. By setting out indicators for each increasinglevel of maturity, the model also charts out an evolutionary pathfor future progress towards the most cutting-edge practices in taxcrime investigation across four levels of maturity: Emerging,Progressing, Established and Aspirational. It therefore also serves asan important tool for measuring the impact of tax crime capacitybuilding interventions, including those promoted by the Addis TaxInitiative and G7 Bari Declaration. The model also has relevance forjurisdictions at all stages of development.

The focal point of this Maturity Model self-assessment exercise isthe tax crime investigation agency in a jurisdiction. However, giventhe strong linkages between tax and other financial crimes, theself-assessment will provide the most useful diagnosis whencompleted jointly with other relevant stakeholders from across arange of financial crime enforcement authorities, the prosecutionagency and the policymakers. Thus, the whole of governmentapproach is an integral part of the model.

For more information:

[email protected]

www.oecd.org/tax/crime

@OECDtax

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TAX CRIME INVESTIGATION MATURITY MODEL © OECD 2020

Tax Crime Investigation Maturity Model

PUBE

This document was approved by the OECD Committee on Fiscal Affairs on 16 November 2020 and prepared for publication by the OECD Secretariat.

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Please cite this publication as:

OECD (2020), Tax Crime Investigation Maturity Model, OECD, Paris.

http://www.oecd.org/tax/crime/tax-crime-investigation-maturity-model.htm

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http://www.oecd.org/tax/crime/tax-crime-investigation-maturity-model.htm

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Table of contents

Executive Summary 4

1 Guidance note for using the Maturity Model 5 Background 5 Objective of tax crime investigations 5 Defined Outcomes 5 Maturity levels 6 Conceptual diagram 6 Indicative Attributes 7 Effectiveness assessment 8 Guide to completing the self-assessment 9

2 The Tax Crime Investigation Maturity Model 10 Principle 1: Ensure tax offenses are criminalised 10 Principle 2: Devise an effective strategy for addressing tax crimes 18 Principle 3: Have adequate investigative powers 25 Principle 4: Have effective powers to freeze, seize, and confiscate assets 31 Principle 5: Put in place an organisational structure with defined responsibilities 39 Principle 6: Provide adequate resources for tax crime investigations 45 Principle 7: Make tax crimes a predicate offence for money laundering 51 Principle 8: Have an effective framework for domestic inter-agency co-operation 55 Principle 9: Ensure international co-operation mechanisms are available 73 Principle 10: Protect suspects’ rights 80

Annex A. Example of a possible format for conducting self-assessment 86

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Executive Summary

The Maturity Model is a tool developed for jurisdictions to self-assess their capabilities to investigate tax crimes and facilitate their tax compliance efforts through capacity building. Based on the OECD’s 2017 publication, Fighting Tax Crime: The Ten Global Principles1, the model charts out an evolutionary path across four levels of maturity: Emerging, Progressing, Established and Aspirational, to show how enforcement capabilities are enhanced through continuous process improvement and holistic implementation of each of those principles. The processes used for implementing the Ten Global Principles are used as the objective criteria for mapping the maturity level in a jurisdiction. These are processes that have been identified across multiple jurisdictions, which have helped to achieve defined outcomes and the overall objective of the tax crime investigative agencies. At higher levels of maturity, the tax crime investigation regime is effective, supports the integrity of the tax system and Sustainable Development Goals (SDGs) of domestic resource mobilisation and countering illicit financial flows (IFF).

Self-assessment through the Maturity Model is a purely voluntary exercise. The Model does not set any new global minimum standards which the jurisdictions are expected to follow. The Maturity Model analyses how a jurisdiction can mature in its ability to fight tax crimes, rather than simply describing what occurs within the tax crime investigation regime. This capacity-building focus is integral to the Maturity Model, in recognition of the Addis Tax Initiative and G7 Bari Declaration, but it is of relevance for jurisdictions at all stages of development. The Aspirational level of maturity focuses on futuristic attributes, making it relevant for the advanced jurisdictions.

The process improvements described in the model under each Principle have been empirically derived from the surveys conducted across 41 jurisdictions as part of the second edition of “Fighting Tax Crime: The Ten Global Principles”, as well as the insights gained through self-assessments conducted at various pilot locations under the TIWB-CI programme.

The focal point of this self-assessment exercise is the tax crime investigation agency. However, given the strong linkages between tax crimes and other financial crimes, the Maturity Model self-assessment will provide the most useful diagnosis only when completed jointly with the relevant stakeholders from across a range of financial crime enforcement authorities, the prosecution agency and policymakers. Moreover, the self-assessment exercise is not meant for making comparison with other jurisdictions, but to identify successful universal processes that have helped to achieve defined outcomes and an overall objective of fighting tax crime in multiple jurisdictions.

The Maturity Model consists of three parts:

• Chapter 1: Guidance note for using the Maturity Model. This provides an overview of the model and an explanation of how to use the model.

• Chapter 2: The Tax Crime Investigation Maturity Model. The chapter contains the model which can be used by tax crime investigation agencies for self-assessment purposes.

• Annex A contains an example of a possible format for conducting self-assessment. 1 Refers to OECD (2017), Fighting Tax Crime: The Ten Global Principles, OECD Publishing, Paris. http://www.oecd.org/tax/crime/fighting-tax-crime-the-ten-global-principles.htm

http://www.oecd.org/tax/crime/fighting-tax-crime-the-ten-global-principles.htm

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Background

1. The Maturity Model, like any forms of modelling, is a simplified framework designed to explain the complex processes of tax crime investigation in an attempt to observe, understand and guide the capacity building efforts in a jurisdiction. This is a self-assessment tool to help jurisdictions understand where they stand in the implementation of the Ten Global Principles, based on a set of empirically-observed indicators. Further, the model charts out a path for future progress towards enhanced enforcement capabilities for achieving the overall objective of a tax crime investigation regime.

2. In addition to providing a framework for capability enhancement to combat tax crimes, the model provides a mechanism for jurisdictions to track their progress on implementation of the Ten Global Principles over time. It therefore also serves as an important tool for measuring the impact of tax crime capacity building interventions, including those promoted by the Addis Tax Initiative and G7 Bari Declaration.

3. This Guidance Note is intended for using as a reference manual for jurisdictions to conduct the Maturity Model self-assessment independently. It briefly explains the Objective and Defined Outcomes of tax crime investigation regime, the key concepts of the Maturity Model and how the Maturity Model can be used by jurisdictions in their capacity building efforts.

Objective of tax crime investigations

4. Broadly speaking, the objective of a tax crime investigation regime can be stated as:

“To support domestic resource mobilisation by addressing the tax gap, countering Illicit Financial Flows and maintaining the integrity of the tax system, leading to improved voluntary compliance through effective deterrence.”

Defined Outcomes

5. Defined outcomes are concrete, specific statements that describe the effects of implementing the Ten Global Principles, which are considered necessary in order to achieve the overall objective of a tax crime investigation regime. The following six Defined Outcomes have been identified, based on multiple country experiences:

• Improved taxpayer compliance • Strategic approach to combatting current, emerging, and future tax crime risks is informed by

Whole of Government approach

1 Guidance note for using the Maturity Model

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• Enhanced enforcement of tax crimes and other financial crimes by natural and legal persons, including professional enablers

• Enhanced prevention and detection of tax crimes and other financial crimes • Offenders punished with dissuasive criminal sanctions and stripped of proceeds of crime • Enhanced international co-operation in the global fight against illicit financial flows

6. The extent to which Jurisdictions achieve these Defined Outcomes depends on the level of maturity and effectiveness of the tax crime investigation regime.

Maturity levels

7. The Model sets out four levels of maturity and the characteristic features of each level are summarised below:

• Emerging: this level is intended to represent jurisdictions where certain processes have been used to develop some capabilities to combat tax crimes, but they continue to be ad hoc and hence need further significant improvements;

• Progressing: this level is intended to represent jurisdictions where certain process- improvement reforms have been initiated but these processes are not yet systematically implemented and institutionalised;2

• Established: this level is intended to represent jurisdictions where robust processes have been put in place, resulting in a high degree of capability in combatting tax crimes and they are institutionalised. Many advanced jurisdictions are expected to cluster around this level;

• Aspirational: this level is intended to represent jurisdictions where the processes have been optimised resulting in a paradigm shift in their efforts to combat tax crimes, with the use of new innovative tools and technology. Few jurisdictions are expected to be consistently at this level currently, but jurisdictions may be able to move from the “Established” to “Aspirational” level of maturity in the medium term;

8. While defining the levels, the “Established” level has been positioned to provide a description where on average most of the developed jurisdictions are evidenced to cluster. Using this as a reference point, the other levels of maturity have been fleshed out by describing the evolutionary pathway for process improvement, from an “Emerging” level to “Established” through an intermediate level of “Progressing”. The journey from “Established” to “Aspirational” is intended to describe what might be possible in medium term for advanced jurisdictions to address emerging risks.

Conceptual diagram

9. Insights from the country experiences highlight that diffused implementation of the Ten Global Principles is usually associated with ineffectiveness and lower levels of maturity. Synchronised implementation improves effectiveness in achieving the Defined Outcomes, leading to higher levels of maturity. In other words, given the inter-related nature of each of the Principles, achieving a lower level of maturity under one Principle will adversely affect the Defined Outcomes and the Objective as a whole.

10. The conceptual diagram below visualises these concepts of the model and how they fit together. It demonstrates how implementation of the Ten Global Principles through process improvements and

2 Institutionalization implies that the process is ingrained in the way the work is performed and there is an organisation-wide commitment and consistency to performing the process.

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synchronised implementation of the Ten Global Principles will improve effectiveness through enhanced enforcement capabilities for countering illicit financial flows, leading to achievement of Defined Outcomes. An effective tax crime investigation regime will help in fulfilling its overarching objective. As a jurisdiction manages to implement the Ten Global Principles collectively and more effectively, it moves along the evolutionary path of maturity towards the Aspirational level.

Figure 1.1. Conceptual framework of the Maturity Model

Note: As a jurisdiction manages to implement the Ten Global Principles collectively and more effectively, it moves along the evolutionary path of maturity towards achieving the overall objective of the Tax Crime Regime.

Indicative Attributes

11. Using the Ten Global Principles as its building blocks, the Maturity Model breaks down each of the Ten Principles into multiple discrete but connected elements. For each element, the model provides a description of certain processes across four levels of maturity as empirically observed in multiple jurisdictions. These descriptors are considered indicators of a particular maturity level, and called “Indicative Attributes”. Mapping of these Indicative Attributes to four levels of maturity is the crux of the Maturity Model, and jurisdictions will evaluate their maturity level vis-a-vis these Indicative Attributes.

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12. A small visualization of how these indicative attributes are implemented in the assessment is shown below:

Maturity Levels Emerging Progressing Established Aspirational Indicative Attributes

Element Sub-Element 1

Characteristics of emerging processes for sub-element 1

Characteristics of progressing processes for sub-element 1

Characteristics of established processes for sub-element 1

Characteristics of aspirational processes for sub-element 1

Sub-Element 2

Characteristics of emerging processes for sub-element 2

Characteristics of progressing processes for sub-element 2

Characteristics of established processes for sub-element 2

Characteristics of aspirational processes for sub-element 2

13. At each level of maturity, the Indicative Attributes display diverse characteristics. At the Emerging level, the processes are ad hoc in nature, whereas, at the Progressing level, process improvement initiatives are undertaken but these are not systematically implemented and institutionalised. The Established level of maturity is characterised by robustness of processes and institutionalisation. The process improvements for enhancing enforcement capability has an important bearing on the effectiveness of the tax crime investigation regime in achieving the Defined Outcomes and the Overall Objective.

14. By design, these indicative attributes are expected to display distinct improvement from an earlier level to the next level of maturity. During the assessment, the assessor should evaluate the nature of processes and how the jurisdiction has initiated process improvements and taken steps towards institutionalising the said processes. A comments/feedback section has been included after each element so that the assessor can record remarks and provide additional information.

15. The model also contains a short introductory text before each principle which briefly describes key features of the principle at hand and characterisation of the evolutionary path towards higher levels of maturity.

Effectiveness assessment

16. Effectiveness in achieving the Defined Outcomes through capacity building by implementing the Ten Global Principles, has been built into the Model’s indicative attributes. During self-assessment, two overarching questions have to be considered (i) to what extent the tax crime investigation regime has been effective in achieving its objectives and the Defined Outcomes? (ii) What can be done to improve effectiveness?

17. The Maturity Model provides for a detailed analysis of effectiveness of the regime through the ‘Review and Monitoring’ mechanism in a jurisdiction (Principle 2.4 discussed in Chapter 2). Country experiences show that the jurisdictions which are successful in implementing the Ten Global Principles in a synchronised manner, and regularly review the implementation process, achieve higher levels of effectiveness. The prevailing practice of maintaining and analysing relevant statistics provides insights to the tax crime investigative agency and policymakers, imparts flexibility to respond to emerging risks and allows for course corrections. Therefore, the robustness of the internal feedback loop adds to the maturity of a jurisdiction.

18. Regarding the second question about how to improve effectiveness, the Maturity Model provides an opportunity to identify the factors that are adversely affecting effectiveness during the self-assessment and steps to be taken for improving effectiveness. During self-assessment, the participants can record the ‘Suggested Next Steps’ in the feedback box after each Principle. A robust ‘Review and Monitoring’ mechanism is thus a key feature in a mature jurisdiction.

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Guide to completing the self-assessment

19. The focal point of the self-assessment through the Maturity Model is the Tax Crime Investigation Agency. However, given the strong linkages between tax crimes and other financial crimes, the self-assessment extends to an evaluation of the inter-agency co-ordination as an integral part of this exercise. Therefore, one possible format for conducting the self-assessment is through a workshop where representatives from all the relevant enforcement agencies and the policy makers participate. Jurisdictions may also consider combining self-assessment through Maturity Model with other external assessment tools or other relevant internal/external reports on the jurisdictions.

20. Self-assessment through the Maturity Model is a purely voluntary exercise. The Model does not set any new global minimum standards which the jurisdictions are expected to follow. The Aspirational level is futuristic and represents practices that are beyond existing standards and common practice. This Aspirational level includes challenging indicators which could be considered on a voluntary basis the medium term, but do not set new global standards. All international instruments and global standards including the principles under the multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC) and obligations in other existing international obligations such as those set out in Mutual Legal Assistance Treaties are sacrosanct, and the model does not aim to suggest otherwise. For example, where relevant the Maturity Model reflects international standards in particular areas (such as on exchange of information for tax purposes as monitored by the Global Forum on Transparency and Exchange of Information for Tax Purposes, or on anti-money laundering and counter-financing of terrorism as monitored by the Financial Action Task Force) but does not suggest that countries must go beyond such standards and competence for reviewing those international standards must remain with such authorised bodies. Maintenance of statistics are meant for jurisdiction’s internal monitoring purpose only and not meant for cross-country comparison. Finally, confidentiality standards surrounding of taxpayer data are respected in the model as per the globally accepted standards.

21. More detailed instructions on a possible format for conducting self-assessment is given in Annex A.

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Principle 1: Ensure tax offenses are criminalised

22. While laying the foundation for criminal justice system for tax offences, Principle 1 guides all other principles and outcomes often hinge on the legal framework. The criminalisation of violations of tax law ensures the availability of criminal investigative and enforcement powers that are necessary to find the truth, including financial investigations and powers to deprive criminals of their proceeds of crime if warranted. It also provides for a basis for domestic co-operation with other law enforcement agencies under the criminal law and international co-operation, all leading towards achieving the goal of deterring tax crimes. Jurisdictions at established levels are evidenced to have legal frameworks in place that criminalise tax offences committed by natural and legal persons, either as principal or accessory, and make available a range of criminal sanctions that are dissuasive and commensurate with the seriousness of the offences, which can be applied effectively in practice.

23. A pathway to higher levels of maturity represents a movement from a legal framework with a limited range of coverage and scope, to a level where there is comprehensive coverage of clearly defined set of tax offences that reflects the evolutionary nature of financial crimes and dissuasive sanctions commensurate with the seriousness of crimes.

2 The Tax Crime Investigation Maturity Model

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Maturity Levels Emerging Progressing Established Aspirational

Indicative Attributes 1.1 Criminalisation of tax offences

a. Individuals Tax offences are criminalised but constituent elements are vague or missing, including jurisdiction over tax offences committed outside the jurisdiction. The scope of criminalized offences is limited and/or the high threshold for criminal tax offences limits the ability to prosecute criminal cases.

Clarity about constituent elements of the offences is improved. Legal jurisdiction over tax offences committed outside the jurisdiction is defined. Scope of tax offences is partly expanded and threshold is altered to appropriately reflect tax criminality.

Coverage of offences is further expanded to reflect the emerging forms of tax crimes including identity theft, missing trader under VAT fraud, etc. Criminality is linked to intent rather than a monetary threshold.

Legal code extends to crimes associated with new technologies (i.e.: crypto-asset, cybercrimes and hacking of taxpayer data and employee files, identity theft for false returns, or hijacking of computers to redirect refunds). Jurisdiction rules are fine-tuned to capture highly mobile international criminals.

Evaluation

Supporting Evidence and Suggested Next Steps

b. Legal persons

Tax offences are criminalised but constituent elements are vague or missing, including jurisdiction over tax offences committed outside the jurisdiction. The scope of criminalized offences is limited and/or the high threshold for criminal tax offences limits the ability to prosecute criminal cases.

Attribution of liability for the criminal acts of the legal entity is fixed on the individuals responsible for these acts.

Clarity about constituent elements of the offences is improved. Legal jurisdiction over tax offences committed outside the jurisdiction is defined. Scope of tax offences is partly expanded and threshold is altered to appropriately reflect tax criminality.

Attribution of liability for the criminal acts of the legal entity is fixed on the Board of Directors and other senior officers of the entity.

Coverage of offences is further expanded to reflect the emerging forms of tax crimes including identity theft, missing trader under VAT fraud, etc. Criminality is linked to intent rather than a monetary threshold.

Attribution of liability for the criminal acts of the legal entity fixed on both the “directing mind and will” of the entity and the entity itself.

Legal code extends to crimes associated with new technologies (i.e.: crypto-asset, cybercrimes and hacking of taxpayer data and employee files, identity theft for false returns, or hijacking of computers to redirect refunds). Jurisdiction rules are fine-tuned to capture highly mobile international criminals.

Attribution of liability for the criminal acts of the legal entity fixed on both the “directing mind and will” of the entity including the beneficial owners explicitly

Limited Broadened Comprehensive

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Maturity Levels Emerging Progressing Established Aspirational and the entity itself.

Evaluation


1.2 Availability of criminal sanctions for violations of tax laws

a. Individuals Criminal sanctions and punitive measures provided for in the law are inadequate: Maximum sanctions are insufficient to dissuade offending; disproportionate to the level of offending; provisions on deprivation of liberty are insufficient to make a request under the mutual legal assistance, does not provide for aggravating circumstances and graded sanctions. Law provides for exemption for criminal liability if taxes are paid up at any stage till sanction is ordered.

Reforms initiated to provide for criminal sanctions and punitive measures which are sufficient to dissuade offending; proportionate to the level of offending; provisions on deprivation of liberty are insufficient to make a request under the mutual legal assistance.

Law does not provide for graded sanctions for aggravating circumstances but introduces a few alternative criminal sanctions instead of total exemption in the event of full payment of taxes, such as, community service, payment of compensation, dis-qualification for occupying certain positions like Board of Directors in a company, etc.

Criminal sanctions and punitive measures are adequate, exhaustive, and maximum sanctions are sufficient to dissuade offending and proportionate to the level of offending Law provides for graded sanctions for aggravating circumstances and introduces a new set of alternative criminal sanctions, such as, renunciation of possession of assets, deferred prosecution agreement.

Criminal sanctions adapt to the changing landscape of operating environment and technology driven emerging crimes to provide for total disruption of criminal network through cross-border action.

Evaluation


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Maturity Levels Emerging Progressing Established Aspirational b. Legal persons

Criminal sanctions and punitive measures provided for in the law are inadequate: Maximum sanctions are insufficient to dissuade offending; disproportionate to the level of offending; provisions on deprivation of liberty are insufficient to make a request under the mutual legal assistance, does not provide for aggravating circumstances and graded sanctions. Law provides for exemption for criminal liability if taxes are paid up at any stage till sanction is ordered.

Sanction for criminal acts of the legal entity is fixed on the individuals responsible for these acts.

Reforms initiated to provide for criminal sanctions and punitive measures which are sufficient to dissuade offending; proportionate to the level of offending; provisions on deprivation of liberty are insufficient to make a request under the mutual legal assistance.

Law does not provide for graded sanctions for aggravating circumstances but introduces a few alternative criminal sanctions instead of total exemption in the event of full payment of taxes, such as, community service, payment of compensation, dis-qualification for occupying certain positions like Board of Directors in a company, etc.

Sanction for criminal acts of the legal entity is fixed on the Board of Directors and other senior officers of the entity and initiation of winding up process for the legal entity.

Criminal sanctions and punitive measures are adequate, exhaustive, and maximum sanctions are sufficient to dissuade offending and proportionate to the level of offending Law provides for graded sanctions for aggravating circumstances and introduces a new set of alternative criminal sanctions, such as, renunciation of possession of assets, deferred prosecution agreement.

Listing in a corporate registry which might affect the possibility of participation in public tender and/or delisting from the stock exchange in case of a public company.

Sanctions for the criminal acts of the legal entity fixed on both the “directing mind and will” of the entity and the entity itself.

Criminal sanctions adapt to the changing landscape of operating environment and technology driven emerging crimes to provide for total disruption of criminal network through co-ordinated global action.

Sanction for the criminal acts of the legal entity fixed on both the “directing mind and will” of the entity including the beneficial owners explicitly and the entity itself.

Evaluation


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Maturity Levels Emerging Progressing Established Aspirational 1.3 Criminalisation of complicity in tax crimes, including aiding, abetting, facilitating or enabling the commission of a tax offence by others

a. Individuals Complicity in tax crimes are criminalised but constituent elements are vague or missing, including jurisdiction over tax offences committed outside the jurisdiction. The scope of criminalized offences is limited and/or the high threshold for criminal tax offences limits the ability to prosecute criminal cases.

Sanctions similar to the underlying primary offences. No specific reference to professional enablers.

Clarity about constituent elements of the complicity in tax crimes is improved. Legal jurisdiction over tax offences committed outside the jurisdiction is defined. Scope of tax offences is partly expanded and threshold is altered to appropriately reflect tax criminality.

Sanctions similar to the underlying primary offences including professional enablers.

Coverage of offences for complicity in tax crimes is further expanded to reflect the emerging forms of tax crimes including identity theft, missing trader under VAT fraud, etc. Criminality is linked to intent rather than a monetary threshold.

Professional enablers are subjected to enhanced sanctions as their participation considered as an aggravating factor.

Legal code extends to complicity in tax crimes associated with new technologies (i.e.: crypto-asset, cybercrimes and hacking of taxpayer data and employee files, identity theft for false returns, or hijacking of computers to redirect refunds). Jurisdiction rules are fine-tuned to capture highly mobile international criminals.

Evaluation


b. Legal persons

Complicity in tax crimes are criminalised but constituent elements are vague or missing, including jurisdiction over tax offences committed outside the jurisdiction. The scope of criminalized offences is limited and/or the high threshold for criminal tax offences limits the ability to prosecute criminal cases.

Sanctions similar to the underlying primary offences.

Clarity about constituent elements of the complicity in tax crimes is improved. Legal jurisdiction over tax offences committed outside the jurisdiction is defined. Scope of tax offences is partly expanded and threshold is altered to appropriately reflect tax criminality.


Coverage of offences for complicity in tax crimes is further expanded to reflect the emerging forms of tax crimes including identity theft, missing trader under VAT fraud, etc. Criminality is linked to intent rather than a monetary threshold.


Legal code extends to complicity in tax crimes associated with new technologies (i.e.: crypto-asset, cybercrimes and hacking of taxpayer data and employee files, identity theft for false returns, or hijacking of computers to redirect refunds). Jurisdiction rules are fine-tuned to capture highly mobile international criminals.

Evaluation

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Maturity Levels Emerging Progressing Established Aspirational Supporting Evidence and Suggested Next Steps

1.4 Criminalisation of conspiracy to commit a tax offence/ organised tax crime

a. Individuals Conspiracy in tax crimes are criminalised but constituent elements are vague or missing, including jurisdiction over tax offences committed outside the jurisdiction. The scope of criminalized offences is limited and/or the high threshold for criminal tax offences limits the ability to prosecute criminal cases.


Clarity about constituent elements of the Conspiracy in tax crimes is improved. Legal jurisdiction over tax offences committed outside the jurisdiction is defined. Scope of tax offences is partly expanded and threshold is altered to appropriately reflect tax criminality.


Coverage of offences for Conspiracy in tax crimes is further expanded to reflect the emerging forms of tax crimes including identity theft, missing trader under VAT fraud, etc. Criminality is linked to intent rather than a monetary threshold.


Legal code extends to Conspiracy in tax crimes associated with new technologies (i.e.: crypto-asset, cybercrimes and hacking of taxpayer data and employee files, identity theft for false returns, or hijacking of computers to redirect refunds). Jurisdiction rules are fine-tuned to capture highly mobile international criminals.

Evaluation


b. Legal persons

Conspiracy in tax crimes are criminalised but constituent elements are vague or missing, including jurisdiction over tax offences committed outside the jurisdiction. The scope of criminalized offences is limited and/or the high threshold for criminal tax offences limits the ability to prosecute criminal cases.


Clarity about constituent elements of the Conspiracy in tax crimes is improved. Legal jurisdiction over tax offences committed outside the jurisdiction is defined. Scope of tax offences is partly expanded and threshold is altered to appropriately reflect tax criminality.


Coverage of offences for conspiracy in tax crimes is further expanded to reflect the emerging forms of tax crimes including billing companies, bogus companies and strawmen, missing trader under VAT fraud, etc. Criminality is linked to intent rather than a monetary threshold.


Legal code extends to conspiracy in tax crimes associated with new technologies (i.e.: crypto-asset, cybercrimes and hacking of taxpayer data and employee files, identity theft for false returns, billing companies, bogus companies and strawmen hijacking of computers to redirect refunds). Jurisdiction’s rules are fine-tuned to capture highly mobile international criminals.

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Maturity Levels Emerging Progressing Established Aspirational Evaluation


1.5 Statute of limitations for commencement of prosecution for tax crimes

a. Individuals Statute of limitations for commencement of prosecution proceedings is inadequate and there is no clarity on the date of commencement.

Reform initiated and the limitation period expanded, aligning with the nature and seriousness of the offences, date of commencement clearly specified.

Statute of limitation is adequate and aligned with the nature and seriousness of the offences, Explicit provision for exclusionary period for extending the period of limitation.

Law further provides for extension of the limitation period in public interest due to extra-ordinary circumstances preventing initiation of prosecution proceedings.

Evaluation


b. Legal persons

Statute of limitations for commencement of prosecution proceedings is inadequate and there is no clarity on the date of commencement.

Reform initiated and the limitation period expanded, aligning with the nature and seriousness of the offences, date of commencement clearly specified.

Statute of limitation is adequate and aligned with the nature and seriousness of the offences, Explicit provision for exclusionary period for extending the period of limitation.

Law further provides for extension of the limitation period in public interest due to extra-ordinary circumstances preventing initiation of prosecution proceedings.

Evaluation


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Maturity Levels Emerging Progressing Established Aspirational Overall Mark for the Principle

Evaluation


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Principle 2: Devise an effective strategy for addressing tax crimes

24. In order to address tax crimes as well as emerging risks, jurisdictions require a framework to assess threats and formulate strategy to mitigate risks3. Jurisdictions at the established level are evidenced to have risk assessment framework and strategies for addressing such risks with clearly defined objectives and risk mitigation plans. An effective risk assessment framework requires wide range of intelligence sources for threat assessment, with inbuilt stakeholder consultation in strategy formulation and subject to regular review and monitoring. An operational plan for risk mitigation is put in place that includes case selection, case development and investigation, employee engagement, workforce development and technology. A communication strategy with the public and media communications generally complements the tax crime strategy in jurisdictions at the established level.

25. A pathway to higher levels of maturity represents a movement from a stand-alone to integrated risk assessment and strategy formulation. At the emerging level, the jurisdiction has stand-alone rudimentary risk assessment framework and strategy formulation process, limited stakeholder consultation and limited integration of intelligence sources. Higher levels of maturity reflect fully integrated systems of risk assessment which use multiple intelligence sources across relevant enforcement agencies. At the aspirational level, the strategy formulation is supported by advance analytics and behavioural insights, which is flexible to be able to make course correction based on experiences.

3 It is important to explain the difference between threat and risk in the model as it has implications for policymakers. Threats are a function of capability and harmful intent, whereas risks refer to the likelihood of threats materialising and the consequent harm associated with such risks (Strachan-Morris). Risk assessment is involved in assessing the likelihood of action taken by the adversaries and the potential harm it likely to cause, and proper risk assessments are informed by sound threat assessments. Risk assessment thus encompasses threat assessment for the purposes of this model.

David Strachan-Morris (2012) Threat and Risk: What Is the Difference and Why Does It Matter?, Intelligence and National Security, 27:2, 172-186, DOI: 10.1080/02684527.2012.661641

https://doi.org/10.1080/02684527.2012.661641

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Indicative Attributes 2.1 Devising a strategy

a. Defining clear objectives

High level annual objectives are set by senior management of tax crime investigation agency as part of strategy for combating tax crimes, with some broad aspirational targets, but with no coherence with other strategic national priorities except that of tax administration.

High level annual objectives are set by the senior management of tax crime investigation agency with specific performance indicators around the goals of prevention, detection, enforcement and recovery of assets, partly aligned with other strategic national priorities set by some other enforcement agencies through informal discussions.

Linkage between tax and other financial crimes is acknowledged and high level annual objectives with specific performance indicators are set by the policy makers and senior management which are aligned with the strategic priorities of all the relevant enforcement and prosecution agencies through a formal consultative process, covering goals of prevention, detection, enforcement and recovery of assets.

Objectives are set under a national risk assessment exercise, explicitly bringing out the linkages between objectives set by various enforcement agencies dealing with financial crimes, with each agency contributing a separate module to the overall risk assessment framework. Addressing tax gap and countering illicit financial flows figure in the objectives explicitly.

Evaluation


b. Formulating a strategy

The strategy for combating tax crime is set by senior management with very limited engagement with investigators and with lack of clarity on accountability.

The strategy is set with full consultation with the investigators of tax crime investigation agency and civil tax auditors, with clear accountability as to the specific performance indicators. However, strategy formulation is mostly confined to the tax crime investigation agency.

The strategy is set through a formal consultative process with all the relevant enforcement and prosecution agencies with clear understanding of areas of joint accountability. Strategy formulation is extended to other enforcement agencies.

The strategy is formed with clear understanding of areas of joint accountability.

The strategic planning process is supported by predictive analytics to forecast different scenarios that should be taken into account.

The process of development of an integrated strategic plan is overseen by a joint task force of policy makers and other stakeholders.

Stand-alone Co-ordinated Integrated

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c. Risk assessment framework

An ad-hoc risk assessment framework is in place with focus on the current risks, using only limited sources of intelligence available within the tax administration without any domain risk-assessment expert and technology.

A more structured risk assessment framework is in place with focus on current and emerging risks, using a few domestic intelligence sources outside tax administration with introduction of new technology tools and risk-assessment domain experts. Range of intelligence sources, level of expertise and introduction of high end technical tools are limited.

A robust risk assessment framework is in place that identifies current, emerging and future risks, based on an objective assessment of wide range of available intelligence sources, both domestic and international, using data warehouse and. high-end data-mining technology tools, with the help of highly experienced risk-assessment domain experts guiding targeted compliance activities.

A robust risk assessment framework is in place, with seamless connection to multiple intelligence sources across databases, both domestic and international, housed in a joint intelligence centre, supported by predictive analytics to forecast different scenarios that should be taken into account while identifying potential risks.

Actionable intelligence is shared with multiple agencies through the joint intelligence centre on real time basis, aimed at targeted compliance activities with the help of behavioural insights.

Uses strong governance process to ensure confidentiality of data.

Evaluation


d. Intelligence sources

Information available within tax administration is being organised, feedback from completed cases and reference from civil auditors used in a limited manner.

In-house intelligence is better organised and accessible with the help of technology, including complaints received from public. Sources are extended beyond tax administration to

Access to a wide range of intelligence sources, both domestic and international, intelligence from other enforcement agencies, financial intelligence from the FIU, financial

Artificial intelligence is increasing used to determine actionable intelligence by linking diverse intelligence sources seamlessly.

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Maturity Levels Emerging Progressing Established Aspirational include certain external databases but with many restrictions.

regulator, third party information on transactions, open source intelligence including social media.

Evaluation


2.2 Operational plan for risk mitigation

a. Prioritisation and mitigation of emerging risks

Risks are prioritised in an ad-hoc manner on a stand-alone basis but no concrete plan to mitigate such risks.

Prioritisation of risks are done in a more systematic manner and a plan to mitigate risks is prepared and implemented in a partly co-ordinated manner with other enforcement agencies.

Risk prioritisation and mitigation plan is comprehensive and co-ordinated with other enforcement and prosecution agencies through a formal consultative process, covering goals of prevention, detection, enforcement and recovery of assets.

Early warning system guides detection and prevention of crimes as part of the mitigation plan.

The risk mitigation plan is set through a formal consultative process with the policy makers and all the relevant enforcement and prosecution agencies with clear understanding of areas of joint accountability.

The mitigation plan is supported by predictive analytics and artificial intelligence to forecast different scenarios that should be taken into account, backed by behavioural insights for targeted enforcement activities.

Technologically advanced and innovative early warning system guides detection and prevention of crimes.

Evaluation


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Maturity Levels Emerging Progressing Established Aspirational b. Allocation of resources

A preliminary plan for allocation of resources in accordance with risk assessment prepared for only current risks but not flexible to tackle emerging risks.

A more structured plan for allocation of resources in accordance with risk assessment prepared for current and emerging risks but not flexible enough to tackle future risks.

A comprehensive plan for allocation of resources is prepared on the basis of assessment of current, emerging and future risks with enough flexibility to meet new challenges.

A technology driven comprehensive plan in place for allocation of resources based on risk assessment on a real time basis with full flexibility to address current, emerging and future risks proactively.

Evaluation


2.3 Communication with public

Communication policy

A communication policy is in place but ad-hoc in nature without any specific guidelines.

A communication policy is in place with a set of specific guidelines, supported by a media team, but restricted to communication with public on case-by-case basis.

A clear-cut communication strategy is in place with detailed guidelines on communication channels based on segmentation. Communication goes beyond cases to inform public of the risks, mitigation plan, early warnings and trend in an ongoing basis.

A comprehensive media strategy is in place and all communication channels are used to inform public about recent trends in tax and other financial crimes and close linkages between these crimes.

Behavioural insights used for developing narratives to achieve the defined outcomes.

Evaluation


2.4 Review and monitoring

a. Maintenance of statistics

Some basic statistics, such as, number of cases referred by civil auditors, number of concluded investigations, number of cases where offence detected, cases referred for prosecution, number of cases where

The range of statistics on criminal tax offences expanded to include number of cases where alternative sanctioned ordered, number of cases where claim of tax deductions for criminal sanctions denied, recovery of assets, exchange of

Comprehensive statistics on criminal tax offences are maintained including information received under automatic exchange of information, international recovery of assets through joint operations with other agencies.

Comprehensive statistics on criminal tax offences are maintained and use of technology makes it available on real time basis.

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Maturity Levels Emerging Progressing Established Aspirational prosecution commenced, number of cases where conviction obtained, number of acquittals, fine imposed for criminal violations of tax laws.

Manual process for storing data.

information with domestic agencies, exchange of information with treaty partners etc.

Information technology used in a limited way to store and manage data.

Use of case management system to store data and use of dashboard for efficient retrieval of information.

Evaluation


b. Review Process

Some ad-hoc review of the fulfilment of the objectives of the strategy but no systematic approach followed

The agency gathers some basic information about the use of existing powers and the main reasons for success or failure of enforcement process. Lessons are learnt by individual decision makers but are not systematically disseminated.

More systematic review of the objectives, risk assessment framework, intelligence sources, outcome of the strategy, undertaken annually but analysis does not lead to course correction without sufficient time lags

Reviews of cases are undertaken and results fed back into improving internal processes, including training and guidance.

The agency undertakes detailed analysis of overall weaknesses in the legislative framework and makes detailed recommendations to policy makers.

There are periodic internal reviews both within and outside the agency including the policy makers and course correction strategies are put in place to respond to emerging risks, taking into account the existing gaps.

The agency undertakes periodic full reviews of the adequacy of the legal framework, the effectiveness of its application and outcomes including wider perceptions of fairness and the deterrence effect.

Transparent and detailed recommendations are made for internal improvements and legal changes.

A sophisticated review mechanism in place supported by statistical analysis, predictive modelling and artificial intelligence to access information on real time basis and respond proactively, following a whole of government approach.

In addition to periodic reviews, increasing use is made of advanced analytics4 and artificial intelligence to enhance the real-time understanding of the robustness, perceived fairness and proportionality of the legal framework and its application.

Advanced analytics used for analysis of data for tax compliance management, trend analysis, pattern of illicit financial flows and policy formulation.

4 Advanced analytics refers to a set of statistical insights and practices that can help distil insight and clarity from large masses of information. See OECD (2016), Advanced Analytics for Better Tax Administration: Putting Data to Work, OECD Publishing, Paris, https://doi.org/10.1787/9789264256453-en.

https://doi.org/10.1787/9789264256453-en

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Overall Mark for the Principle

Evaluation


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Principle 3: Have adequate investigative powers

26. Successful investigations are paramount to uncovering tax crimes and the eventual prosecution or deterrence of such crimes. Jurisdictions at established levels of maturity are evidenced to have adequate investigative powers to successfully investigate tax crimes, including powers to obtain third party documents, search & seizure including digital evidence, intercept mail & telecommunication, interview, conduct covert surveillance, conduct undercover operations, and effect arrest. Principle 3 also has direct connection with Principle 10 in jurisdictions at the established level. The protection of suspects’ rights is necessary to obtain quality evidence and ensure integrity of investigations and the tax crime investigative agency.

27. While moving to higher levels maturity, jurisdictions will expand legal powers to investigate and limit undue restrictions and cumbersome processes of authorisation. Jurisdictions at high levels of maturity will have adequate powers with reasonable restrictions and ample procedural safeguards for preventing abuse of power, with robust processes in place for imparting flexibility to enhance the investigative capability in a changing operational environment.


Indicative Attributes 3.1 Investigative powers

a. Powers to obtain third party documentary information

Limited powers granted with several restrictions and a cumbersome process of authorisation, lack of established protocol that makes it difficult to exercise the power in practice. Procedural safeguards for preventing potential abuse of power are not clearly defined.

Adequate powers granted but certain restrictions still remain in respect of certain third parties, but process of authorisation is streamlined. Basic procedural safeguards established, but oversight is limited.

Adequate powers granted with reasonable restrictions on third party documents, with extensive procedural safeguards and sufficient oversight

Power affirmed in law and procedures governing when and how the power should be used in practice are clear and well communicated to competent authorities through guidance and training. Review mechanism imparts flexibility to make amendments due to change in the operational environment

Evaluation


Restrictive Responsive Flexible

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Maturity Levels Emerging Progressing Established Aspirational b. Powers to search property and to search and seize physical evidence

Limited powers granted to search with several restrictions regarding access to property or seizure of documents and a cumbersome process of authorisation that makes it difficult to exercise the power in practice. Procedural safeguards for abuse of power are not clearly defined.

Adequate powers granted but certain restrictions still remain in respect of access to property or seizure of documents but process of authorisation is streamlined. Basic procedural safeguards established, but oversight is limited.

Adequate powers granted with reasonable restrictions on access to property or seizure of documents, with extensive procedural safeguards for with sufficient oversight


Evaluation


c. Powers to search and seize digital evidence

Limited powers granted to search and seize digital evidence with several restrictions and a cumbersome process of authorisation that makes it difficult to exercise the power in practice. Procedural safeguards for abuse of power are not clearly defined.

Adequate powers granted but certain restrictions still remain in respect of seizure of digital evidence and assets but process of authorisation is streamlined and detailed operational guidelines issued. Basic procedural safeguards established, but oversight is limited.

Adequate powers granted with reasonable restrictions on seizure of digital evidence and assets, with extensive procedural safeguards and sufficient oversight.


Evaluation


d. Powers to interview

Limited powers granted to interview a suspect, accused and a witness with several restrictions and a cumbersome process of authorisation that makes it difficult to exercise the power in practice. Procedural

Adequate powers granted to interview a suspect, accused and a witness but certain restrictions still remain in admissibility of oral evidence and process of authorisation is streamlined and detailed

Adequate powers granted to interview a suspect, accused and a witness with reasonable restrictions on admissibility of oral evidence, with extensive procedural safeguards and sufficient oversight.

Power affirmed in law and procedures governing when and how the power should be used in practice are clear and well communicated to competent authorities through guidance and training. Review mechanism imparts flexibility to make

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Maturity Levels Emerging Progressing Established Aspirational safeguards for abuse of power are not clearly defined.

operational guidelines issued. Basic procedural safeguards established, but oversight is limited.

amendments due to change in the operational environment

Evaluation


e. Powers to intercept mail and telecommunications

Limited powers granted to intercept mail and telecommunications either directly or indirectly, with several restrictions and a cumbersome process of authorisation that makes it difficult to exercise the power in practice. Procedural safeguards for abuse of power are not clearly defined.

Adequate powers granted either directly or indirectly, but certain restrictions still remain in respect of coverage of interceptions and process of authorisation is streamlined and detailed operational guidelines issued. Basic procedural safeguards established, but oversight is limited.

Adequate powers granted either directly or indirectly, with capacity to intercept mail, phone, social media, online chat, e-mail, other types of interceptions including communications using dark web, with reasonable restrictions and extensive procedural safeguards with sufficient oversight.


Evaluation


f. Powers to conduct covert surveillance

Limited powers granted either directly or indirectly to conduct covert surveillance with several restrictions and a cumbersome process of authorisation that makes it difficult to exercise the power in practice. Procedural safeguards for abuse of power are not clearly defined.

Adequate powers granted either directly or indirectly but certain restrictions still remain in respect of places covered and methods used in such surveillance and process of authorisation is streamlined and detailed operational guidelines issued. Basic procedural safeguards established, but oversight is limited.

Adequate powers granted either directly or indirectly with extensive coverage of places to be covered, methods to be used, with reasonable restrictions and extensive procedural safeguards with sufficient oversight.


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g. Powers to conduct undercover operations

Limited powers granted either directly or indirectly to conduct undercover operations with several restrictions and a cumbersome process of authorisation that makes it difficult to exercise the power in practice. Procedural safeguards for abuse of power are not clearly defined.

Adequate powers granted either directly or indirectly to conduct undercover operations but certain restrictions still remain and process of authorisation is streamlined and detailed operational guidelines issued. Basic procedural safeguards established, but oversight is limited.

Adequate powers granted either directly or indirectly to conduct undercover operations with reasonable restrictions with extensive procedural safeguards and sufficient oversight.


Evaluation


h. Powers to arrest

Arrest power granted either directly or indirectly with several restrictions and a cumbersome process of authorisation that makes it difficult to exercise the power in practice. Procedural safeguards for abuse of power are not clearly defined.

Adequate arrest powers granted either directly or indirectly with a few restrictions and process of authorisation is streamlined and detailed operational guidelines issued. Basic procedural safeguards established, but oversight is limited.

Adequate Arrest powers granted either directly or indirectly with reasonable restrictions with extensive procedural safeguards and sufficient oversight.


Evaluation

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Maturity Levels Emerging Progressing Established Aspirational Supporting Evidence and Suggested Next Steps

3.2 Use of investigative powers in practice: Constraints affecting effectiveness

a. Legal framework, process and operational constraints

Legal, operational and process barriers prevent competent authorities from utilising the investigative powers available to them in law. Prevailing bribery and corruption adversely affect exercise of investigative powers.

Lack of authorization for departure prohibition orders and preservation orders, or a cumbersome procedure for these orders, allows for evasion of justice in certain cases.

Constraints to the investigative powers approval process are being eased. Legal framework gaps exist, such as an insufficient treaty network for strategic information gathering, and these gaps negatively affect investigations in practice.

A manual of techniques of investigation is prepared but not used regularly by the investigators.

Administrative checks against bribery and corruption have been put in place but it continues to be a risk.

Departure prohibition orders and preservation orders can be authorized, but procedural delays for these orders sometimes allows for evasion of justice in certain cases.

Enhanced inter-agency co-operation and international treaty network with all the strategic partners having broad areas of collaboration.

A manual of techniques of investigation is prepared and updated on a regular basis and used by the investigators.

Mechanism put in place to evaluate the defined outcomes for analysis of performance with the help of a case management tool, tracking the life cycle of an investigation and generating relevant statistics.

A streamlined process of authorizing departure prohibition orders and preservation orders in relevant cases prevents evasion of justice.

A robust review mechanism is in place supported by advance analytics that allows regular analysis of the defined outcomes achieved through exercise of the investigative powers, with flexibility to respond to changing circumstances.

Administrative checks are in place so that bribery and corruption of tax crime investigators is almost non-existent.

Cooperation internationally with customs and entry officials, including INTERPOL, allows for proper enforcement of departure prohibition orders and other legal matters.

Evaluation


b. Technological and resource constraints

Technological and resources constraints act as major barriers to investigation.

The use by IT tools by officials and training to investigators is developing. Statistics on defined outcomes, such as, number of investigation conducted, time taken for completion, fines imposed & collected, conviction obtained, assets recovered, are

Proactive steps have been taken to address all the constraints to investigations through adequate financial, IT, and training support.

Technology and resources are frequently adapted to service high-tech investigative needs, even for the most novel forms of tax crimes.

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Maturity Levels Emerging Progressing Established Aspirational prepared but there is no systematic analysis of performance.

Evaluation


Overall Mark for the Principle

Evaluation

Supporting Comments/ Evidence

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Principle 4: Have effective powers to freeze, seize, and confiscate assets

28. The ability of tax crime enforcement authorities to interrupt the movement of assets and recover proceeds of crime connected to suspected criminal activity can be essential in identifying or preventing an offence from occurring. Jurisdictions at the established level are evidenced to have effective powers, either directly or indirectly through other enforcement agencies, to freeze, seize, and confiscate assets in the course of a tax crime investigation in a timely and efficient manner. These powers are backed by the necessary operational framework and a monitoring mechanism for ensuring transparency and integrity of the process, while protecting the rights of the suspects. Effective powers under this Principle are also co-ordinated with Principle 9, as effective powers regarding asset recovery are necessary to improve results of international co-operation and enforce foreign state’s freezing orders. Furthermore, effective asset recovery is often supported by a dedicated unit in the organisational structure and strong protection of suspect rights, which is evaluated in this model in Section 5.4 of Principle 5 and Principle 10.

29. As jurisdictions move to higher levels of maturity, they expand legal powers regarding recovery of assets, remove undue restrictions, improve cumbersome processes of authorisation, and establish protocol. Monitoring mechanisms exist in mature levels for preventing abuse of power, with robust processes in place for optimizing use of these powers in a changing operational environment.

Maturity Level Emerging Progressing Established Aspirational

Indicative Attributes 4.1 Freezing of assets in connection with suspected tax crime

a. Legal framework for domestic cases

Limited powers exist to freeze assets connected to suspected tax crime, but laws are ineffective due to excessive restrictions and a cumbersome process of authorisation (i.e. a high financial threshold, high threshold for prison term for eligibility, operational for a short duration, authorisation process is highly centralised and no provision

Adequate powers exist to freeze assets connected to suspected tax crime (including rapid freezing orders within 24-48 hours). The process of authorisation is streamlined and extended to various crime instruments; the financial threshold is lowered but legislative barriers still impede effective use of these powers in practice (e.g.

Effective powers exist to freeze suspected assets connected to tax crime. Legal barriers are minimized and can adapt to a changing operational environment, with adequate procedural safeguards for ensuring transparency and preventing potential abuse of power.

Strategic threat assessment and behavioural insights5 are increasingly used to enhance real-time understanding of the changing requirements due to change in operational environment and new emerging risks, such as crypto-currencies, imparting flexibility to amend the legal framework.

5 Behavioural insights refers to inductive approach to policy making that combines insights from psychology, cognitive science, and social science with empirically-tested results to discover how humans actually make choices (OECD). See https://www.oecd.org/gov/regulatory-policy/behavioural-insights.htm

Restrictive Responsive Optimised

https://www.oecd.org/gov/regulatory-policy/behavioural-insights.htm

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Maturity Level Emerging Progressing Established Aspirational for rapid freezing, restricted to only proceeds of crime etc.).

Law does not provide for 3rd party freezing of proceeds of crime.

threshold of proof for obtaining a freezing order is very high, high eligibility threshold based on prison term).

Law now provides for 3rd party freezing of proceeds of crime.

Evaluation


b. Legal framework for enforcement of foreign state’s / court’s freezing orders

Legal framework for international cooperation exists but breadth of coverage does not cover implementation of foreign states/courts freezing orders.

Breadth of coverage is extended to cover implementation of foreign states/courts freezing orders from a very limited set of jurisdictions.

Breadth of coverage is extended to cover enforcement of foreign state’s / court’s freezing orders from all the strategic partner jurisdictions.

Database of freezing orders from all the strategic partners are analysed to take informed decisions on risk assessment and development of strategy for countering illicit financial flows.

Evaluation


c. Operational framework

Procedures for the freezing of assets in connection with suspected tax crime lack clarity due to absence of a manual for recovery of asset with a set of guidelines. No monitoring mechanism in place.

Manual for recovery of assets is in place, setting out the circumstances warranting freezing orders and procedures for the freezing of assets in connection with suspected tax crimes including enforcement of freezing orders of foreign state’s / court’s and a monitoring mechanism, but still subject to insufficient monitoring or review.

Comprehensive procedures for the freezing of assets in connection with suspected tax crimes including enforcement of freezing orders of foreign state’s / court’s that are subject to ongoing monitoring or review. Processes are adapted based on past experiences.

Strategic threat assessments and behavioural insights are increasingly used to enhance real-time understanding of the changing requirements due to change in operational environment and new emerging risks, for making informed decision on regular updating of the operational framework. Standard

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Maturity Level Emerging Progressing Established Aspirational operating procedures (SOP) are adapted for new phenomenon or threats such as cryptocurrencies, etc.

Evaluation


d. Use of freezing powers in practice

Competent authorities freeze assets in connection with suspected tax crime cases in a very limited number of cases on an ad hoc basis.

Competent authorities freeze assets in connection with a substantial number of suspected tax crime cases including implementation of foreign states/courts freezing orders from a very limited number of jurisdictions but statistics with details of freezing orders, follow up action, details of assets frozen, extension orders etc. are not systematically maintained for effective monitoring.

Competent authorities freeze assets in all appropriate cases of suspected tax crime cases including implementation of foreign states/courts freezing orders from all the strategic partner jurisdictions in line with procedures governing the freezing of such assets. Database of freezing orders, details of assets frozen and follow up action is maintained for regular monitoring.

Freezing of assets aided by financial intelligence, domestic sharing of information with other agencies and international exchange of information.

Competent authorities carefully carry out analysis using strategic threat assessment and behavioural insights, to verify the effectiveness of the legal and operational framework for making improvement.

Evaluation


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Maturity Level Emerging Progressing Established Aspirational 4.2 Seizure of assets in connection with suspected tax crime


Limited powers exist to seize assets connected with suspected tax crime but laws are difficult to apply in practice due to excessive restrictions and a cumbersome authorisation process (i.e. high financial threshold, high threshold for prison term for eligibility, operational for a short duration, authorisation process is highly centralised, restricted to only proceeds of crime, etc.).

Adequate powers exist to seize assets from suspected tax crime. The process of authorisation is streamlined and extended to various crime instruments; the financial threshold is lowered but legislative barriers impede effective use of these powers in practice (e.g. threshold of proof for obtaining a seizure order is very high, high threshold for prison term for eligibility).

Effective powers exist to seize assets from suspected tax crime. Legal barriers are minimized and can adapt to a changing operational environment, with adequate procedural safeguards for ensuring transparency and preventing potential abuse of power.

Strategic threat assessments and behavioural insights are increasingly used to enhance real-time understanding of the changing requirements due to change in operational environment and new emerging risks, imparting flexibility to amend the legal framework.

Evaluation


b. Legal framework for enforcement of foreign state’s / court’s seizure orders

Legal framework for international cooperation exists but breadth of coverage does not cover implementation of foreign states/court seizure orders.

Breadth of coverage is extended to cover implementation of foreign states/courts seizure orders from a very limited set of jurisdictions.

Breadth of coverage is extended to cover enforcement of foreign state’s / court’s seizing orders from all the strategic partner jurisdictions.

Database of seizing orders from all the strategic partners are analysed to take informed decision on risk assessment and development of strategy for countering illicit financial flows.

Evaluation


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Maturity Level Emerging Progressing Established Aspirational c. Operational framework

Procedures for the seizing of assets in connection with suspected tax crime lack clarity due to absence of a manual for recovery of asset with a set of guidelines.

No monitoring mechanism in place.

Manual for recovery of assets is in place, setting out the circumstances warranting seizing orders and procedures for the seizing of assets in connection with suspected tax crimes including enforcement of seizure orders of foreign state’s / court’s and a monitoring mechanism but still subject to insufficient monitoring or review.

Comprehensive procedures for the seizing of assets in connection with suspected tax crimes including enforcement of seizure orders of foreign state’s / court’s, supervisory mechanism, transparency of process, safe custody of assets, that are subject to ongoing monitoring or review.

Strategic threat assessments and behavioural insights are increasingly used to enhance real-time understanding of the changing requirements due to change in operational environment and new emerging risks, for making informed decision on regular updating of the operational framework.

Standard operating procedures (SOP) are adapted for new phenomenon or threats such as cryptocurrencies, etc.

Evaluation


d. Use of seizure powers in practice

Competent authorities seize assets in connection with suspected tax crime cases in a very limited number of cases on an ad hoc basis.

Competent authorities seize assets in connection with a substantial number of suspected tax crime cases including implementation of foreign states/courts seizing orders from a very limited jurisdictions but statistics with details of seizing orders, follow up action, details of assets seized, extension orders etc. are not systematically maintained for effective monitoring.

Competent authorities seize assets in all appropriate cases of suspected tax crime cases including implementation of foreign states/courts seizing orders from all the strategic partner jurisdictions in line with procedures governing the seizing of such assets. Database of seizing orders, details of assets seized and follow up action is maintained for regular monitoring.

Seizure of assets aided by financial intelligence, domestic sharing of information with other agencies and international exchange of information.

Competent authorities carefully carry out analysis using strategic threat assessment and behavioural insights, to verify the effectiveness of the legal and operational framework for making improvement.

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Maturity Level Emerging Progressing Established Aspirational Evaluation


4.3 Confiscation of assets in connection with tax crime


Limited powers exist to confiscate assets from tax crime, but laws are difficult to apply in practice due to excessive restrictions and/or a cumbersome process of authorisation (i.e. high financial threshold, high threshold for prison term for eligibility, authorisation process is highly centralised, restricted to only proceeds of crime etc.).

Law does not provided for value-based6, third party7 and extended confiscation8.

Adequate powers exist to confiscate assets from tax crime. The process of authorisation is streamlined and extended to various crime instruments; the financial threshold is lowered but legislative barriers still impede effective use of these powers in practice (e.g. threshold of proof for obtaining a confiscation order is very high, high eligibility threshold based on prison term).

Law now provides for value-based confiscation based on conviction.

Effective powers for confiscation of assets from suspected or proven tax crimes. Legal barriers are minimized and can adapt to a changing operational environment, with adequate procedural safeguards for ensuring transparency and preventing potential abuse of power.

Law now provides for value-based, third party and extended confiscation, as well as non-conviction based confiscation.

Strategic threat assessment and behavioural insights are increasingly used to enhance real-time understanding of the changing requirements due to change in operational environment and new emerging risks, imparting flexibility to amend the legal framework.

Evaluation

6 Value based confiscation is a method of confiscation that enables a court to impose a pecuniary liability equivalent to the amount of the criminal proceeds (OECD Ten Principles 2nd Edition). 7 Third party confiscation is a measure made to deprive someone other than the offender – the third party – of criminal property. This applies where that third party is in possession of assets which are knowingly transferred to him/her by the offender to frustrate confiscation (OECD Ten Principles 2nd Edition). 8 Extended confiscation involves not only confiscating property associated with a specific crime, but also additional property which the court determines constitutes the proceeds of other crimes (ibid.).

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Maturity Level Emerging Progressing Established Aspirational Supporting Evidence and Suggested Next Steps

b. Legal framework for enforcement of foreign state’s / court’s confiscation orders

Legal framework for international cooperation exists but breadth of coverage does not cover implementation of foreign states/courts confiscation orders.

Breadth of coverage is extended to cover implementation of foreign states/courts confiscation orders from a very limited set of jurisdictions.

Breadth of coverage is extended to cover enforcement of foreign state’s / court’s confiscation orders from all the strategic partner jurisdictions.

Database of confiscation orders from all the strategic partners are analysed to take informed decision on risk assessment and development of strategy for countering illicit financial flows.

Evaluation


c. Operational framework

Procedures for the confiscation of assets in connection with suspected tax crime lack clarity due to absence of a manual for recovery of asset with a set of guidelines.

No monitoring mechanism in place.

Manual for recovery of assets is in place, setting out the circumstances warranting confiscation orders and procedures for the confiscation of assets in connection with suspected tax crimes including enforcement of confiscation orders of foreign state’s / court’s and a monitoring mechanism but still subject to insufficient monitoring or review.

Comprehensive procedures for the confiscation of assets in connection with suspected tax crimes including enforcement of confiscation orders of foreign state’s / court’s, supervisory mechanism, transparency of process, safe custody of assets, that are subject to ongoing monitoring or review.

Strategic threat assessments and behavioural insights are increasingly used to enhance real-time understanding of the changing requirements due to change in operational env

tax crime investigation maturity modelthe tax crime investigation agency in a jurisdiction .however,...

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